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The new 'micro-targeting' of Russia

(Reuters) - - The most recent escalation in economic sanctions against Russia sends an important signal that the United States and its European allies are willing to act, even at some risk to their own economies, to punish Moscow for fostering instability in Ukraine and supporting rebels that the U.S. government says downed a commercial jetliner.

Beyond this objective, however, it is also important to recognize how the design of the measures being imposed represents an innovative “micro-targeting” approach that has the potential to transform the role sanctions can play in foreign policy and geopolitics in the years ahead.

The United States and Europe this week expanded financial restrictions – creating extremely narrow prohibitions on technology exports and on the use of U.S. and EU financial markets - aimed at increasing the strain on Russia’s banks, oil industry and military. They build on two prior rounds of sanctions that targeted Russian cronies and some banking, arms and energy entities.

The banking restrictions are the most significant actions taken this week. They will prevent a broad swath of Russian banks from raising money in Europe and similarly refuse several significant banks in Russia access to U.S. capital markets. With the doors closing to the world’s most attractive markets, Russian banks will have to scramble domestically - or look East - to find new financing.